Mexico wooed to take our gas

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Australia hopes to supply a quarter of the demand for liquefied
natural gas imports into Mexico and California in coming years,
according to Industry Minister Ian Macfarlane.

Mr Macfarlane said from Mexico City that Australian LNG exports
to the region could reach $US1.5 billion ($A2 billion) a year. The
country hoped to initially ship about 28 million cubic metres a day
of LNG to Mexico, which could free up gas supplies in North
America.

"In terms of the potential for Australia into Mexico, it's
realistic to say that we could be looking at contracts as big as
our contract into China," he said. Australia has a 25-year contract
to supply $A1 billion of LNG to China each year.

"And if you combine the potential here with the potential in
California, Australia could be looking at, in terms of western
America, potential exports approaching $US1.5 billion per annum of
LNG."

Mr Macfarlane and Mexican Energy Minister Fernando Elizondo
signed a 10-year memorandum of understanding on Monday to work
together on energy issues and to exchange technological expertise
and information. "These accords offer advantages and possibilities
that make it easier to compete economically in this globalised
world," Mr Elizondo said.

The memorandum builds on a $US187 million deal last year under
which Australia will supply Mexico's state-owned power utility, the
Federal Electricity Commission, with 2.28 million tonnes of
coal.

The next big step in strengthening the relationship would be for
Australia to clinch LNG supply contracts in Mexico.

Mexico's economy likely expanded by 4 per cent last year, and is
expected to grow another 3.8 per cent this year. With this growth
comes greater demand for electricity, which is pushing up natural
gas orders to fuel the plants.

Mexico's potential for west coast LNG imports was about 30
million tonnes a year, said Mr MacFarlane. "There is this very
large, very real export opportunity for LNG into Mexico and
Australia will need to compete."

A range of Pacific Rim nations are expected to step up to meet
Mexico's growing energy needs. Australia anticipated starting to
ship natural gas to the country after completion of LNG receiving
terminals on Mexico's Pacific coast, Mr Macfarlane said. The first
should be ready by 2008.